By Rowena Edwards
LONDON (Reuters) -Oil prices slipped on Monday but were holding near their highest this month as easing COVID restrictions in China raised hopes of a demand recovery in the world’s top crude importer.
Brent crude fell 76 cents, or 0.89%, to $84.52 a barrel by 1448 GMT.
U.S. West Texas Intermediate crude, meanwhile, was down 71 cents, or 0.89%, at $79.15 in thin trade owing to a U.S. public holiday.
Both contracts rose more than 8% last week for the biggest weekly gains since October after China abandoned what remained of its zero-COVID policy by reopening its borders on Jan. 8.
China’s crude imports rose 4% year on year in December and an expected resurgence in travel for the Lunar New Year holiday at the end of the week raised the outlook for demand for transportation fuels.
Traffic levels in China are rebounding from record lows after the easing of COVID-19 restrictions, resulting in stronger demand for crude and oil products, ANZ analysts said in a note.
But reports over the weekend highlighting an increase in COVID-19 deaths weighed on sentiment.
“While China’s outlook has turned a corner, it must be noted that the normalisation of its oil demand will be gradual … As things stand, China’s oil recovery remains anticipated rather than realised,” PVM analyst Stephen Brennock said.
The United Arab Emirates’ energy minister, Suhail al-Mazrouei, on Monday said that oil markets were balanced.
“Brent may now be stabilising in the $85-90 range, with WTI just a little lower around $80-85,” said Craig Erlam, a senior market analyst at OANDA.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency will release their monthly reports this week, watched closely by investors for indications on the outlook for global demand and supply.
Investors will also keep an eye on the World Economic Forum (WEF) in Davos, which opened on Monday, and a Bank of Japan (BOJ) meeting this week to determine if it will defend its super-sized stimulus policy.
(Reporting by Rowena Edwards in LondonAdditional reporting by Florence Tan and Jeslyn Lerh in SingaporeEditing by Edmund Blair and David Goodman)
